The Arctic Refuge Lease Sale Was a Flop

On Wednesday afternoon, around the same time that President Trump’s lies about election fraud led a violent mob to invade the U.S. Capitol, it became clear that his administration’s campaign for oil drilling in the Arctic National Wildlife Refuge was likewise built on bad information and falsehoods.  

That revelation came via the Interior Department’s opening of sealed bids in the first-ever sale of energy leases in the refuge, the culmination of a four-decade campaign by Alaskan politicians and Republicans in Congress to develop the sanctuary’s wildlife-rich coastal plain, home to caribou, polar bears, and millions of migratory birds. 

The sale, the first ever in the refuge, netted $14.4 million to be split evenly between the federal government and the State of Alaska. When U.S. Sen. Lisa Murkowski of Alaska, other Republicans in Congress, and President Trump opened the refuge to leasing through a 2017 tax bill, they touted a Congressional Budget Office estimate of around $900 million that would pour into federal coffers over the course of a decade, offsetting tax cuts that favored the wealthy and corporations. The tax bill also called for another lease sale by 2024, but so far the proceeds sit at less than 1 percent of what the CBO predicted. Rents on the leased parcels should raise that figure to 2.6 percent. 

“This was sold and promoted as a revenue generator,” but that narrative proved false, says Autumn Hanna, vice president of Taxpayers for Common Sense. Her group and others warned when the tax bill was being discussed that the revenue projections were grossly overblown, based on unrealistic assumptions about how much companies would bid. “We weren’t surprised at all. This is something we’ve been warning about since the beginning.”

Major oil companies sat out the sale. Only three bidders participated, and they leased only half of the 22 tracts available, for a total of about 553,000 acres. Alaska itself, through a state economic development corporation, was by far the biggest bidder, spending $12 million on nine leases with bids at the sale’s minimum of $25 per acre. The two other bidders were Regenerate Alaska, Inc., a subsidiary of the Australian company 88 Energy; and Knik Arm Services LLC, a company formed a year ago. 

“This lease sale was an epic failure for the Trump administration and the Alaska congressional delegation,” said Adam Kolton, executive director of Alaska Wilderness League, in a press release. “After years of promising a revenue and jobs bonanza they ended up throwing a party for themselves, with the state being one of the only bidders.”

The lackluster results—and the last-ditch move by the state to snap up leases in case no one else bid—reflect the many risks and challenges of energy development in the wildlife refuge. That includes legal and reputational risks posed through bold activism by the Indigenous Gwich’in and others who promise a tough fight against any drilling on the coastal plain. Oil companies, stinging from low crude prices, are wary to jump into such a remote and contentious region, and major banks say they won’t finance projects there. 

Murkowski recognized those difficulties in a press release, noting that the sale “did not occur under ideal conditions, but it will benefit Alaskans both in the short-term and well into the future.” The Alaska Oil and Gas Association called the sale “a historic event, and decades in the making,” but also acknowledged the disappointing outcome. “While the results may not have been as robust as we might have expected, industry still supports future access to this area,” said Kara Moriarty, the group’s president and CEO, in a statement. 

Opponents had hoped to block the sale, but a federal judge on Tuesday denied a request for an injunction filed by the National Audubon Society and other groups. U.S. District Court Judge Sharon Gleason, put on the bench by President Barack Obama, ruled that the plaintiffs hadn’t shown that the sale would cause immediate, irreparable harm, since companies would need permits before they could drill in the refuge. 

Although Gleason allowed the sale to proceed, the court is still considering broader lawsuits from Audubon and others that claim the administration’s work leading up to it broke environmental laws. There are also legal questions about whether the Alaska Industrial Development and Export Authority was qualified to bid on leases, as it is not an oil company.

Before the government issues leases to the top bidders, the Department of Justice must first complete an anti-trust review. That’s typically a two-month process, but the Trump administration has just two weeks to complete it before Joe Biden—who has pledged day-one action to stop drilling in the refuge—takes office. 

What happens next is uncertain, but it is clear the groups who opposed the lease sale won’t stop now that it’s come to pass. “The Gwich'in Nation has fought this process every step of the way,” said Bernadette Demientieff, executive director of the Gwich'in Steering Committee, in a statement about the sale. “We have the strength of generations of love and prayer supporting us, and that is far stronger this administration's greed. We will not back down.”